Indian PM Manmohan Singh has stressed the need for increased trade ties with China on the second day of his official visit to the country.
Mr Singh is paying his first visit to China since he came to power
He told a meeting of business officials that India should bolster exports to China which, in turn, needed to give greater market access to Indian goods.
Though bilateral trade has grown, so has India's trade deficit with China, which currently stands at over $9bn.
Mr Singh is on a three-day trip. Border talks are also on the agenda.
"The challenge before us is to diversify our export basket to China," Mr Singh told a meeting ahead of talks with Chinese Premier Wen Jiabao.
"I would urge Indian business to vigorously pursue opportunities for expanding non-traditional items of exports. Such efforts, when matched by greater market access for Indian goods in China, will help to bridge the rising trade deficit between us," he said.
Annual trade between the two countries is currently worth about $37bn (£18.9bn), and has risen 56% in the past year.
But India's trade deficit with China has also risen from about $4bn to $9.6bn since 2006, according to the Indian ministry of trade, and could exceed $12bn by the end of the financial year.
India and China are two of the world's fastest growing economies.
Mr Singh told the Chinese state news agency on arrival that ties between the states had acquired global significance.
He will hold talks with President Hu Jintao, Prime Minister Wen Jiabao and China's top legislator, Wu Bangguo.
After arriving in Beijing on Sunday, Mr Singh began his visit by touring several venues featuring in this year's Olympic Games.
Mr Singh's visit, the first by an Indian premier in nearly five years, comes at a time when trade between India and China is booming and talks in Beijing are expected to focus on surpassing the $40bn target they agreed to reach by 2010.
The neighbours held a joint military exercise last year
Correspondents say there is strong competition as well as co-operation between the two booming economies, because they are vying for the same markets and natural resources.
The talks in Beijing are also expected to touch on unresolved territorial disputes which have been the subject of negotiations since 2003.
The two countries fought a brief but bloody border war in 1962.
Ahead of his visit to China, Mr Singh said he would discuss "issues relating to the boundary", which are believed to include concerns that Chinese troops have made numerous incursions across the border into India over recent months.
India's relations with China have also been complicated by Beijing's strategic alliance with Pakistan, which it has supplied with arms and missile technology.
China, meanwhile, has expressed concern about India's involvement in the so-called axis of democracy that includes Japan, Australia and the United States.
The BBC's Daniel Griffiths in Beijing says both Mr Singh and the Chinese leaders he meets will emphasise the positive aspects of their relationship in the coming days.
But it is going to be a long time before the two Asian giants really trust each other, our correspondent says.